Challenger lenders are taking the fight to the big banks

Thinking about taking out a home loan with one of Australia’s big four banks? Well, you might want to think twice.

For some borrowers, ANZ, Commonwealth Bank, NAB and Westpac may offer the best home loan for their financial situation and budget. However, if you shop around, you might find you can get a better home loan from one of the many other lenders in Australia.

What does ‘better’ mean? It means different things to different borrowers. For some, it might mean lower interest rates or lower fees. For others, it might mean more flexible lending conditions or more personalised customer service.

The point is to do your research because there are more than 100 mortgage lenders in Australia. This means there’s a good chance you’ll discover that other institutions are offering ‘better’ home loan products than the big four banks.

Online lenders may offer lower rates, lower fees

These 100+ lenders include smaller banks, credit unions, building societies – as well as an increasing number of online lenders.

Online lenders allow you to apply for home loans over the internet. They generally claim to offer lower interest rates and fees as well as better customer service than traditional banks.

Why lower pricing? They say it’s because they don’t have expensive branch networks, which means they have lower overheads and can pass on the savings to customers.

Why better service? They say it’s because they’re smaller, which means they can treat customers in a more flexible, personalised way.

UBank and loans.com.au are two of the most prominent online lenders in Australia.

UBank home loans

• Variable rates from 2.84% (comparison rate also 2.84%)
• 3-year fixed rates from 2.69% (comparison rate 3.19%)
• No ongoing fees
• Apply through online form and follow-up phone call

Loans.com.au home loans

• Variable rates from 2.88% (comparison rate also 2.90%)
• 3-year fixed rates from 2.99% (comparison rate 3.27%)
• No ongoing fees
• Apply online, track your application through online portal

Do your research before choosing a mortgage

Again, it’s important you shop around before taking out a home loan.

If you decide to use an online lender, you might find better value with an institution other than UBank or loans.com.au.

You might also find a particular bank, credit union or building society that offers better value than an online lender.

Do your research, because choosing the wrong home loan can sometimes be a costly mistake.

Compare home loans in Australia